News Story

Taxpayers Pay $50 Million For State Police Double-Dipping Program Since 2015

Incentives let active officers also receive pensions during last six years on the job

A program intended to keep Michigan State Police troopers from retiring when they become eligible for a state pension has cost taxpayers more than $50.1 million since 2015.

In 2018, one MSP employee received $504,000 from the program, and four others received more than $400,000 each. The information comes from a Freedom of Information Act request made to the Michigan State Police, which did not release the names of the individuals in the program.

Documents received in a response to a Mackinac Center for Public Policy request revealed that the payouts had risen to $16,403,264 in 2018, up from $7,227,243 in 2016, an increase in payouts of almost 127%.

Lawmakers created the Deferred Retirement Option Plan, or DROP, in 2004, when state troopers were retiring faster than budget-makers could find money to replace them.

At that time, the number of active MSP troopers had fallen to 1,080, down from 1,340 in 2001. Training enough new recruits to replace them was so costly that just two cohorts of new troopers were enrolled in a training school between 2002 and 2010.

Lawmakers determined that rather than hire new cohorts, it would be cheaper to entice experienced, retirement-eligible troopers to get pension benefits and also remain on the payroll for up to six additional years as active employees. Under DROP, participants receive early pension benefits that are deferred and held for them in an interest-bearing account. Once they retire, the benefits are paid out, and they start getting regular monthly pension checks.

This is essentially a legal form of double-dipping that allows employees to get both regular pay and (deferred) pension benefits for up to six years while still on the job.

Over the past five years, a large number of participants have maxed out their six-year DROP eligibility and retired, collecting large lump sum payments in addition to a lifetime pension and health insurance benefits.

An analysis done by the Mackinac Center for Public Policy in 2017 showed that an employee with 25 years on the job and an annual salary of $109,000 would walk away with an additional $435,725 after six years in the DROP program.

According to the study, 17 Michigan State Police employees were paid $109,000 or more in 2016.

In 2016, only one participant received a lump sum greater than $400,000.

But according to figures received from from the state, in 2018, five employees collected more than $400,000 in addition to their pensions. One employee had collected more than $500,000. Retirees are also allowed to spread their payments over a five year-period for tax reasons.

Despite the increasing costs, Michigan State Police told Michigan Capitol Confidential that the DROP program is as crucial today as it was when it was first launched because the department is still understaffed.

“Despite being able to hire over 1,000 new troopers in the last decade, 15 years after establishment of the DROP, enlisted staffing has only grown by 107 enlisted members to a total of 1,915,” Michigan State Police spokeswoman Lori Dougovito said in an email. “Because enlisted attrition has been so high and is forecasted to remain high in the upcoming years, the argument in support of the DROP is no less valid today than it was in 2004.”

Dougovito said there are 225 active employees in the DROP program, and 70% of them are either troopers or sergeants.